A lump sum investment – A single premium policy – A one off investment – An Insurance Based Investment Product –
Whilst technically all of the definitions of an Investment Bond are correct, it’s no wonder investors sometimes get confused.
When investors and investment companies talk about ‘lump sums’ it often conjurers up images of large amounts of money. Many friendly societies and other providers of Investment Bonds are able to open a Bond with just £500, so whilst this is a lump sum it can be a relatively modest one.
An Investment Bond will include an element of life insurance and whilst life cover might not be the primary reason for investing in an Investment Bond it is technically an insurance policy, which is why the amount you invest is sometimes referred to as the premium. Unlike the premiums you pay for your car and home insurance you don’t have to pay it every year and you’re much more likely to get them back.
Insurance Bonds are one off investments, you can’t pay into one monthly, although you could open a new one every month.
And finally, Insurance Based Investment Products, a new name dreamt up by the European regulators. It doesn’t really matter how you describe them, what really matters with Investment Bonds is the underlying investment and how you can benefit from investing in an Investment Bond.
The underlying investment will generally be a fund; a selection of shares, government and company bonds and possibly property, which will be professionally managed to maximise the return, mirror a share index or spread the risk across a wide range of investments. The fund you select will depend on how much risk you want to take. Some funds specialise in a particular industry or country, whilst some are worldwide or take an ethical stance.
There are Unit-linked Bonds linked to a Unit-linked Fund and With-profits Bonds which are linked to a With-profits Fund. The value of your Bond if it is invested in a Unit-linked Fund will change every day as the value of the investments rise or fall. A With-profits Bond, which is usually a more cautious investment, is much less volatile to these daily fluctuations.
One the main advantages of Investment Bonds is that they allow an investor to withdraw 5% of the original investment every year without incurring any immediate tax liability. This is really helpful to higher rate taxpayers who want to delay payment of any tax until they fall into a lower tax band, such as in retirement and to investors who have already used up their annual capital gains tax allowance.
Investment Bonds can be used if you are setting up a Trust Fund or to manage any potential inheritance tax liability.
You can put a Bond in joint names, which makes it an ideal investment for grandparents who want to gift money to a grandchild but want to keep some control over when the investment is accessed.
In future articles we’ll look at these in more detail but in the meantime if you want more information you can talk to any of the membership team here at Healthy Investment or to your financial adviser.
Invest in Tomorrow with a Healthy Investment Guaranteed Anniversary Bonus Bond
With the Healthy Investment Guaranteed Anniversary Bonus Bond you can invest for yourself, your children or grandchildren and get the return and security you are looking for. You do not have to decide how long you want to invest for, however, it should be viewed as a medium to long term investment.
You can choose to invest from £500 up to a maximum of £250,000.
With the Healthy Investment Guaranteed Anniversary Bonus Bond, the amount you invest increases through the regular annual bonuses that are added to your investment. You start to earn bonuses from the day that you invest with us and if you withdraw from your bond part way through a year, you will still get a bonus for the time your money has been invested. Bonus rates can change every year and, in exceptional circumstances, could be nil – they depend on investment performance and other factors.
Guaranteed Life Cover
A small amount of life cover is included as part of your bond. If you die whilst you have money invested in the bond, Healthy Investment guarantees to pay out at least what you have invested plus any bonuses that have already been added, less any withdrawals you have made.
This life cover is important, especially for older investors who want to make sure their legacy is protected from investment market volatility – for bonds held in joint names, the guaranteed life cover applies to the last remaining bondholder.
For further information about how we invest Members’ money and the ethical investment products we provide, please visit our website at www.healthyinvestment.co.uk or contact the friendly team at Healthy Investment on 0161 762 5790; or email enquiries@healthyinvestment.co.uk.
Alternatively, you can find out about our ethical products by clicking on the links below:-
